U.S. MARKET AVERAGES

Stocks started trading in the negative, hurt by surging oil prices and disappointing outlook from computer maker Dell. Market sentiment was also affected by economic reports which revealed a larger-than-anticipated rise in wholesale prices and weakening consumer confidence.

Oil futures sharply rose Friday on supply concerns, following a threat from Nigeria to declare ‘total war’ to all foreign oil countries. A barrel of light crude jumped $1.18 to $59.64 on the Nymex.

Dell reported 52% profit jump in Q4 on 13% revenue growth, beating expectations. The company also forecast Q1 results below analysts' expectations which added to the market's worries about shrinking profits in 2006.

In economic news, investors were disappointed with a 0.3% rise in January's PPI, which grew faster than economists' prediction for a 0.2% increase. The Labor Department also said that Core PPI, which excludes volatile energy and food prices, rose 0.4%.

Technology stocks were the most notable decliners in the opening hours. The disk drive sector was among the worst performers with a decline of 1.9%, dragged largely by Advanced Digital Information Corp. (ADIC: chart) which fell more than 11% on earnings news.

Commodity stocks were the early standouts to the upside. The gold sector climbed nearly 2.8%. Energy stocks were also strong, extending yesterday's gains with the oil service sector up about 1.5%.

In midmorning trading, the Dow Jones industrial average fell 30.97, or 0.28%. The Standard & Poor's 500 index was down 4.24, or 0.33%, and the Nasdaq composite index slid 14.00, or 0.61%.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.54% from 4.59% late Thursday.

ECONOMIC NEWS

The Department of Labor released its report on producer prices in the month of January on Friday, showing that prices rose in line with economist estimates. At the same time, the report showed a bigger than expected increase in core prices.

The Labor Dept. said that its producer price index rose 0.3 percent in January following a 0.6 percent increase in December. Economists had been expecting the index to increase by about 0.3 percent.

The relatively modest increase in prices came as energy prices were unchanged in January after surging up by 2.0 percent in December. Food prices edged up by 0.2 percent in January following a 0.8 percent increase in the previous month.

The report also showed that core prices, which exclude food and energy prices, rose 0.4 percent in January after edging up by 0.1 percent in each of the two previous months. The increase marked the biggest rise in core prices in a year and exceeded economist estimates of 0.2 percent growth.

The bigger than expected increase in core prices may raise some concerns about inflation and the possibility of further interest rate hikes by the Federal Reserve. Subsequently, traders are likely to keep a close eye on next week''s report on January consumer prices.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks ended Friday session mixed. The Nikkei sharply dropped 330 points, or 2.06%, despite higher-than-expected GDP growth. Across the region South Korea’s Kospi climbed 1.4%, Hong Kong’s Hang Seng gained 0.2%, while the Bombay Stock Exchange’s Sensitive index suffered a steep decline of 1.13%.

European stocks reached a new four-and-a-half year high in a quiet morning session Friday. Economic news from the U.S. and Japan failed to give a certain direction to the stocks and the U.K.’s Daily Mail & General Trust tumbled 11%. The German DAX 30 lost 0.1%, the French CAC 40 added 0.1%, and London’s FTSE 100 was slightly down st 5.827.

OIL, METALS, CURRENCIES

Crude oil prices advanced on renewed supply concerns, raised by Nigeria’s threat to declare ‘total war’ to all foreign oil companies. Light sweet crude for March delivery rose $1.29 to $59.75 a barrel. London Brent climbed $1.30 to $60.09.